FAQ

What
is the Basic Income Grant (BIG)?

A
Basic Income Grant (BIG) is a monthly cash grant (e.g. N$100) that
would be paid by the state to every Namibian citizen regardless of
age or income. The money, which is paid to people not in need, is
recuperated through the tax system. The main benefit of the grant is
its ability to improve everyone's life by eradicating destitution
and reducing poverty and inequality.

Where
does the idea come from?

The
Namibian Tax Consortium (NAMTAX) made the proposal for a Basic
Income Grant for Namibia in the year 2002. The consortium was asked
to review the current tax system in Namibia. The proposal for a
Basic Income Grant is part of their recommendations to redistribute
income in Namibia.

The proposal
recommends to pay a cash grant to every Namibian. The Consortium has
drawn on the debate in South Africa, where a wide range of groups -
including the trade unions, NGOs, churches and a government's expert
panel on comprehensive social security - have proposed a Basic
Income Grant.

How
would a BIG work?

Every
Namibian would receive such a grant until s/he becomes eligible for
a state pension at 60 years. In the case of children aged 17 or
younger, the care-giver would receive the grant on behalf of the
child. In practice this means that if there are 6 people living in a
household and the level of the grant is set at N$100, this household
in total would receive N$600,- per month from the state.

Why
do we need a BIG?

About
two thirds of all Namibians live below the poverty line.
Furthermore, Namibia has the most unequal distribution of income in
the whole world. The reduction of inequality - one of the greatest
legacies of Colonialism and Apartheid - is not only a justice issue,
but also has been identified as a prerequisite for economic growth
and investment in developing countries.

Why
do the rich qualify for a BIG? Shouldn't one rather target people who
are most affected by poverty?

Classic
welfare programmes using a means-test to target beneficiaries have
been proven to be more expensive, wasteful and also ineffective to
target people and to limit social assistances to specific groups and
people. If targeting is applied by means of added administrative
requirements - the poorest are actually those who are least likely
to get benefit from the programmes, as they by nature are the most
disadvantaged in terms of access to information, infrastructure, and
administrative services provided. Instead, by giving a grant to
everyone one is can be sure that all people in need receive support.
The BIG is thereby self-targeting without having to rely on an
administratively difficult means-test with adverse economic
incentives.

With a BIG the rich
will at first also receive the grant. However, through adjustments
in the tax system the money is gradually recuperated. The
adjustments in the tax system are made in such a way, that
middle-income earners will receive the grant, but at the same time
their tax is increased so that they pay back the amount of the grant
The rich, however, will be paying more in taxation than what they
receive through the grant. They become net payers and income is
effectively redistributed. By doing so, social assistance becomes a
right, not labelling people as poor, and at the same time an
effective tool in redistribution.

What
are the benefits of a BIG?

The
main benefit of the grant is its ability to improve everyone's life
by reducing poverty and inequality. All Namibians would benefit from
the BIG and there would be nobody without a baseline support.
Everybody would at least get some money to support him/herself. In
addition, a BIG would redistribute income from the rich to the poor
people in Namibia and by doing so would make Namibia a more just and
equal society.

Research shows that
an increase in income, also increases peoples capacity to look for
work and also increases their chances of finding work. A BIG would
therefore not only be a safety net but it would be more like a
springboard for people to find jobs and earn money.

Furthermore, a BIG
is a universal grant, that means that everybody receives it. It is
not means-tested, people do not have to prove that they are poor or
do not have a job. Means-tested grants penalise people for getting a
job or earning money in other ways because they lose the grant if
their income increases. Thereby through means-testing, well intended
cash grants can become a poverty-trap creating dependency. On the
contrary a BIG, as a universal grant, would not discourage people
from looking for work but instead would enable people to get out of
the vicious circle of poverty and look for work.

How
much would a BIG cost and how would it be funded?

There
are three basic options or a combination thereof, out of which a BIG
can be funded:

First, adjustments
in the income tax structure. Higher income earners would bear the
cost in form of a solidarity levy to finance the benefit to the
poor.

Second,
the NAMTAX consortium proposed to fund the BIG through an increase
of 6.5% in VAT. This would entail that people would pay more for
their daily goods but at the same time would also benefit from the
BIG. The model prepared by the consortium shows that 85% of the
people would benefit more from the BIG than paying more on daily
goods. The increase in VAT would finance the BIG by making rich
people pay for it, hence it would distribute income more fairly in
society. In addition, one can think of other funding methods, like
increasing taxes on luxury goods like cars, tobacco, alcohol etc.

Third,
through reprioritization in the budget.

How
would people get the BIG?

The
BIG could be paid out just like the other current grants. Ideally,
the consortium proposed to use smart cards and fingerprint
identification like they are used for some of the Old Age Pensions.
In the long run, this is a cost-effective way and does not leave
room for corruption. In the beginning, the setting-up of the system
would need additional funding.

What
are the disadvantages of the BIG?

The
initial costs and the setting up of the delivery system are the main
difficulties of the BIG in the beginning. However, once the delivery
system is set up, the costs will go down. In addition, the BIG is
likely to stimulate economic growth as people have more money to
spend and to invest within the Namibian economy. This will not only
improve the living standard of people but also increase the tax
revenue of the government.

How
can you prevent people from wasting the grant on alcohol, lottery
tickets, etc.?

Honestly,
you can't. You can also not prevent people who currently receive
money from government from wasting their money. However, poor people
cannot afford to waste their money and the majority of people use
their money responsibly and wisely - the people themselves know what
they need most. Namibia has the experience that the state pensions
are- by the overwhelming majority - spent to the benefit of the
poorest people in society, including grandchildren.

Are
there better alternatives to a universal grant?

Following
an extensive review of the relevant literature and an analysis of
possible alternative strategies, the NAMTAX consortium found that by
far the best method of addressing poverty and inequality would be a
BIG (NAMTAX, 2002:60) There are alternatives, like only supporting
children up to the age of 17. However, these alternatives are less
effective and many people would still be left without any support.
There are also more expensive alternatives, like 'workfare', which
requires people to work in order to get support from government.
However, these programmes are very expensive and are not able to
reach all people in need. Other programmes of government like school
feeding schemes etc. should not be seen as alternatives, but as
being complementary.

Will
people become dependent on the BIG?

Poor
people are dependent on assistance from other people - relatives and
friends who have some sort of income. A BIG gives people an income
source of their own, which they can count on and which enables them
to take their own decisions. It also lessens the burden on the
working poor who currently have to support relatives and friends
with their limited incomes. Therefore, a BIG in fact reduces
dependency, freeing resources for economic investment.

Local and especially
rural markets benefit greatly from these transfers as they have the
potential to kick-start the economy in the underdeveloped rural
areas. The Basic Income Grant, by providing a universal, stable, and
continuous income source, has the highest developmental potential as
the people can count on it and better plan their economic
activities.

What
is the BIG Coalition?

In
September 2003, the Synod of the ELCRN stated that Namibia faces the
problem of poverty and inequality. In this context, it welcomes the
proposal of a BIG by the NAMTAX commission. It believes that a BIG
has the ability to lift people out of poverty, enabling them to
become economically active. Furthermore, it acknowledges that a BIG
can facilitate the redistribution of wealth. The synod has made a
resolution to work with the Namibian government to further
investigate and implement this proposal. In November 2004, the ELCRN
organised an international conference on income security where the
idea of a BIG for Namibia was discussed between many different
stakeholders, including churches, unions, NGOs, and Government
representatives. This conference resolved to launch a BIG coalition
in Namibia. On April 27th 2005, the coalition was officially
launched in Windhoek and the Council of Churches, the National Union
of Namibian Workers, the National NGO Forum, the Namibian Network of
AIDS Service Organisations, the Legal Assistance Centre, and the
Labour, Resource and Research Institute started the coalition. The
aim of the coalition is to work together with Government to make the
BIG a reality in Namibia.

From
January 2008 to December 2009 the BIG Coalition implemented the
world-wide first Basic Income Grant Pilot project in Otjivero -
Omitara, Namibia. (BIG Pilot
Project)